Articles from October 2016

Friday’s GDP data release showed that the US economy grew at its fastest pace for 2 years in the 3rd quarter of this year.

This positive news gives the Federal Reserve a huge backing with regards to their likely interest rate change in December. The growth was predicted to be around 2.5% but they have outdone themselves with a figure of 2.9%.

Consumer spending (making up two thirds of the world’s biggest economy) was a key factor in the positive numbers. The election campaign is expected to make for a volatile November for the dollar, but there is no major concern now for Yellen and co to make their expected move come December’s rate hike.

With a number of key figures in the UK recently resigning, being sacked or promoted, Mark Carney is said to have agreed to stay in his key role long term.

This has no doubt left some relieved as the Bank of England met with both Theresa May and Philip Hammond this week. There was some uncertainty around the Bank of England governor, but rumours have surfaced this weekend that he has agreed to stay in his position for the full 8 years expected of him.

Wise Money sees Super Thursday back this week

Super Thursday is back this week, as Mark Carney delivers what is expected to be a no change in terms of interest rates. There were hints at a second rate cut in the UK post Brexit, but a continued surprise in healthy data has left senior figures with no doubt that a downgrade in rates is not required.

Today we have Eurozone Consumer confidence, Gross Domestic Product, with German Retail Sales of note in terms of key data.

Sterling is higher this morning against the euro, after the European Central Bank’s (ECB) meeting at lunchtime yesterday failed to deliver any significant change.

The ECB left monetary policy unchanged, as expected, with the refinancing rate remaining at 0.00% and the deposit rate at -0.4%. The euro briefly spiked higher after Mario Draghi said that there was no discussion, either on tapering the QE programme or extending it beyond the original deadline of March 2017.

Whilst sterling finished strongly on the euro, it wasn’t reciprocated on the US dollar, as strong US housing data released had the greenback soaring late in the session.

Portugal’s government bond yields at six week interst rates low

This morning, Portugal’s government bond yields are hovering near six week lows, ahead of a key review by Canadian ratings firm DBRS, out after the close of play today. Whilst this is slightly concerning for Portugal, they are expected to get through the test unscathed. If it were to be downgraded, it would fall out of the ECB’s QE programme.

Wise Money news to come

Today is fairly thin in terms of wise money news data, however we do have UK public finance figures out this morning. Whilst expected in lower than last month’s number, a lower figure shouldn’t dampen Sterling’s resurgence on the euro too much. Aside from this, most of the day will be spent interpreting the ECB press conference from yesterday, with many investors keenly watching Sterling/euro advances.

Foreign Secretary Boris Johnson believes that Brexit will be a good deal to access the single market.

After a steady flow of positive data in the UK, Foreign Secretary Boris Johnson, suggested anti-Brexit campaigners have got it wrong.

Standing in front of a select Foreign Affairs committee, he said that the EU would be wrong to ‘punish’ the UK for leaving, also commenting that Brits will still drink champagne and be the biggest importer of German cars than any other.

It’s his belief that the UK will get a good deal regarding access to the single market, whilst gaining freer access to the global market.

There’s good news for rent payers, as the rate of rent increase grew at its slowest pace in September this year, thanks to the decision of landlords to absorb the growing tax rates rather than pass them onto already high-paying renters.

With a tax reduction in buy to let properties expected in April 2017, landlords seem to have decided to let the slight increase slide, keeping tenants happier as new contracts currently average just over £900 per month. In London, the cost actually fell 0.8% which will no doubt be good news for those looking to move in the city.

Janet Yellen rounds up the week at Boston conference

After a thin day of data yesterday and slight GBP fightback, today’s US Advanced Retail Sales & the University of Michigan Confidence report are the key pieces of data available, whilst Janet Yellen finalises the weeks trading with a conference in Boston.

New UK Chancellor Philip Hammond took to the Conservative stage, and set a positive tone for the conference.

He stated that roads and railways, among other infrastructure, has been seriously under invested, and that the UK is considerably behind other dominant countries. Hammond has been assigned the task of announcing the Autumn Statement, and investors will want his positive sentiment to be more concrete on November 23.

Much needed positive wise money data for UK

With regards to data, the UK enjoyed some much needed positive news, with Manufacturing PMI rising to 55.4 in September against 53.4 in August. Exports have been enjoying a tremendous amount of added work, as the pound continues to be hit hard by most trading currencies.

That said, importers are starting to take financial hits across the board. Buying foreign currency is proving expensive for import businesses, and Teresa May’s announcement that Article 50 will be triggered Q1 2017 has found financial directors wincing that much more.

European bank job cuts

European bank job cuts have made the front pages this morning, as a number of banks are suggesting seats may be left empty in the coming years. Dutch, German and Spanish banks have all stated in recent days that a staff cut is only natural due to current market conditions, as well as some looking at a new digital age, stating a non-requirement for human resource.

UK stock exchange highs

The FTSE 100 has cleared its year high as sterling fell off a cliff in early trading, after May announced an Article 50 date, and outlined her hard stance on key issues. Today has already seen the Reserve Bank of Australia keep interest rates at 1.5%, with New Zealand sharing its Dairy Auction averages with onlookers. In the European and US markets, we have very little to mull over, with UK Construction PMI the only dish to pick.